The next stocks to get hit by the China earnings threat

As third-quarter earnings season kicks off this week, one company's report is already showing signs of stress from a decelerating Chinese economy.

Shares of Yum Brands plunged 19 percent Wednesday after reporting earnings that fell short of expectations, with China results particularly disappointing. Skin care company Nu Skin also saw its stock plummet on lower-than-expected sales in the Asian country.

And according to some traders, China could cause a lot more trouble as third-quarter earnings season heats up.

Erin Gibbs, equity chief investment officer of S&P Capital IQ, said she is concerned about companies with more than 10 percent of sales coming out of China. These include consumer discretionary stocks Delphi, BorgWarner and Leggett & Platt.

"BorgWarner had 11 percent of its sales last year come from China, and was expected to have a much higher percentage after their $550 million expansion program," Gibbs said. "They too could make missteps, or see lower-than-expected growth like Yum."

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.